Commodities Trading: Exchange, Broker and OTC Platform Licensing Explained

A commodities trading licence in Kenya is not a single document. The Capital Markets Authority licenses commodity exchanges, commodity brokers and, since December 2025, over-the-counter platforms, and which licence you need depends on how the trading is actually organised. A centralised exchange with brokers dealing for clients sits under one set of rules. A digital platform that matches buyers and sellers directly sits under another, newer set.

What counts as a commodity under Kenyan law

The Capital Markets Act defines a commodity broadly. It covers agricultural, livestock, fishery, forestry, mining or energy goods, and any product manufactured or processed from them. It also covers financial instruments, an index, right or interest in any such commodity, and anything else the Cabinet Secretary determines by Gazette notice to be the subject of a commodity contract.

The Act’s definition of a commodity contract includes a spot commodity contract and a commodity futures contract, together with any other class of contract the Authority prescribes by regulations. In practice, tea, coffee, maize, minerals and energy products can all be the subject of regulated trading. The definition is wide enough that a business should not assume its product falls outside the regime simply because it is physical rather than financial.

Pathway one: commodity exchanges and brokers

The Capital Markets (Commodity Markets) Regulations, 2020 (Legal Notice 41 of 2020) govern the exchange-based pathway. Under regulation 3, no one may carry on business as a commodity exchange, or hold themselves out as providing or maintaining one, without a commodity exchange licence from the Authority. A securities exchange or derivatives exchange that wants to operate a commodities exchange must set up a separate legal entity to do so.

An applicant applies on Form A in the First Schedule. The Regulations then impose continuing obligations on a licensed exchange, including rules approved by the Authority, a qualified board, a compliance officer, committees for audit and risk, and a requirement to maintain liquid net worth that the Authority considers adequate for the size and complexity of the business.

Brokers have their own licence. Regulation 25 provides that a person shall not carry on or purport to carry on business as a commodity broker unless licensed by the Authority and conducting business in accordance with the rules and practices of the commodity exchange where the trading takes place. Applications are made on Form B, accompanied by the fees in the Second Schedule.

The Regulations also deal with how business is conducted. Transactions on a commodity exchange include dealings in spot commodity contracts, and the exchange must submit contract specifications to the Authority for approval before listing. Regulation 45 requires a commodity broker to keep its own funds strictly segregated from each client’s funds and to reconcile its accounts daily. Part V establishes a Settlement Guarantee Fund, maintained by the exchange, to guarantee members who fail to meet clearing and settlement obligations.

Pathway two: the over-the-counter platform licence

The newer pathway is found in the Capital Markets (Licensing Requirements) (General) Regulations, 2025 (Legal Notice 197 of 2025), which Kenya Law records as taking effect on 11 December 2025. Regulation 11 provides that a person who wishes to establish, maintain or operate an over-the-counter platform shall apply to the Authority for a licence, using Form 1 in the First Schedule.

The application must be accompanied by, among other things:

• details of the management structure, shareholders and directors;
• certified copies of the certificate of incorporation and the Memorandum and Articles of Association;
• the latest audited financial statements;
• detailed information on the proposed trading platform, which must be a digital platform;
• information on market facilities, including the quotation board and information board;
• a code of conduct and trading rules covering membership requirements, the instruments to be traded, how instruments are admitted, suspension of trading, cancellation of orders, clearing and settlement, and supervision of the platform; and
• the prescribed fees in the Sixth Schedule.

The Authority may also require other information. The practical point is that the trading rules are a core part of the application, so a platform should have them drafted before it files.

Fees

The Sixth Schedule to the 2025 Regulations sets the fees for an over-the-counter platform at KES 10,000 on application, KES 100,000 for the licence and KES 100,000 as the annual regulatory fee. For comparison, a securities exchange pays KES 100,000, KES 200,000 and an annual fee of 1% of gross earnings, excluding transaction fees. Fees for commodity brokers and exchanges under the 2020 Regulations are in that instrument’s own Second Schedule and should be checked against the current text before budgeting.

Why this matters now

Regulation 58(2) of the 2025 Regulations requires a person operating an over-the-counter platform or an intermediary service platform to apply to the Authority within one year from the date the Regulations take effect. On Kenya Law’s recorded commencement date, that points to a deadline in December 2026. Regulation 58(1) separately keeps existing licences in force, but requires licensees to meet any additional requirements within twelve months of commencement.

The 2025 Regulations also revoke the earlier Capital Markets (Licensing Requirements) (General) Regulations, so older checklists based on the previous instrument should not be relied on. A business already running an online commodity-matching service should therefore treat the transitional window as a live compliance deadline rather than a grace period with no consequences.

Choosing the right pathway

The two pathways answer different questions. If you intend to run a venue with a clearing house, member brokers and standardised spot contracts, you are in exchange territory and the 2020 Regulations apply. If you intend to run a platform where parties trade bilaterally, you should assess the 2025 over-the-counter platform licence. If you only intend to execute trades for clients on an existing exchange, the broker licence is the relevant one.

Hybrid models need care. A platform that starts as a simple marketplace but later adds clearing, guarantees or standardised contracts may drift into exchange activity, and the Regulations treat that as a different licensed business. Getting the structure right at the start is cheaper than restructuring after the Authority has raised questions.

Practical steps before you apply

• Map each product you plan to trade against the Act’s definition of a commodity and commodity contract.
• Decide whether trading will be centralised or bilateral, and whether you need clearing and settlement.
• Prepare corporate documents, audited accounts, directors’ and shareholders’ details, and the trading rules.
• Budget for the application, licence and annual regulatory fees.
• Diarise the transitional deadline if you already operate a platform.

Frequently asked questions

This article is general information on Kenyan law as at its publication date, not legal advice. Reading it does not create an advocate and client relationship.